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BUS 205 FINANCE
PROF. JEFFERS
TAKE HOME #3 MC
NAME:_____________________________
DATE:_____________
Chapter 5 Time Value of Money
1. A famous athlete is awarded a $9 million contract that stipulates equal payments
to be made monthly over a period of five years. To determine what such a
contract is worth today, you would need to use:
a. present value factors
b. future value factors
c. present value factors of an annuity
d. future value factors of an annuity
2.
Which of the following terms best describes an annuity due?
a. a perpetuity
b. unequal payments
c. payment at beginning of year
d. payment at the end of the year
 3. The _________ value of a savings or investment is its amount or value at the
present time.
a. present
b. future
c. book
d. none of the above
 4. A loan that is repaid in equal payments over a specified time period is called
a(n)
a. discount loan
b. balloon loan
c. amortized loan
d. none of the above
5. Interest earned only on an investment’s principal or original amount is referred
to as:
a. simple interest
b. compound interest
c. discount interest
d. annuity interest
6. A series of equal payments or receipts that occur at the beginning of each of a
number of time periods is referred to as:
a. an ordinary annuity
b. a deferred annuity
c. an annuity due
SUMMER 2011 TAKE HOME 3 – Page 1
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View Full DocumentBUS 205 FINANCE
PROF. JEFFERS
d. an extraordinary annuity
7.
A loan that is repaid in equal payments over a specified time period is referred
to as a(n):
a. discounted loan
b. amortized loan
c. simple interestfree loan
d. inflationindexed loan
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 Spring '11
 MinLiu
 Accounting

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